SHANGHAI–(BUSINESS WIRE)–Lufax Holding Ltd (�Lufax or the Company) (NYSE: LU), a leading technology-empowered personal financial services platform in China, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2020.
Fourth Quarter 2020 Financial Highlights
(In millions except percentages, unaudited) | Three Months Ended December 31, |
|
| |||||
| 2019 |
| 2020 |
| YoY | |||
| RMB |
| RMB |
| USD |
|
| |
Total income | 12,549 |
| 13,286 |
| 2,036 |
| 5.9% | |
Total expense | (8,153) |
| (9,106) |
| (1,396) |
| 11.7% | |
Net profit | 2,425 |
| 2,847 |
| 436 |
| 17.4% | |
Net margin | 19.3% |
| 21.4% |
| 21.4% |
| 10.9% |
Fourth Quarter 2020 Operational Highlights
Retail credit facilitation business:
Wealth management business:
Mr. Ji Guangheng, Chairman of Lufax, commented, As the regulatory environment continued to tighten in 2020, we maintained active dialogues with regulators and proactively communicated our corporate mission and business value propositions. Unlike other online consumer lending platforms, Lufax primarily serves micro and small business owners and thus facilitates the growth of the physical economy. Our mission is in full alignment with the policy directions. Additionally, we have lowered our lending costs and increased our overall risk-taking rate. Beyond transitioning to a risk-sharing business model, we also stopped accepting online deposits and shifted our focus to wealth management and technology empowerment. With our advanced technology capabilities, sophisticated management knowhow, strong pricing power, and versatile risk mitigation expertise, we will complete our business transition smoothly and maintain regulatory compliance at the same time.
Mr. Gregory Gibb, Co-Chief Executive Officer of Lufax, commented, We remained steadfast in our commitment to driving high quality and profitable growth in the face of regulatory uncertainties and macro headwinds. During the fourth quarter, we bolstered our credit portfolio quality, transitioned to a more sustainable risk-sharing business model, expanded our coverage of core customer segments, and grew our current product clients substantially. As a result, we exceeded our previous guidance, increased our balance of loans facilitated by 17.9% year over year to RMB545.1 billion, and grew our client assets by 23.0% year over year to RMB426.6 billion by the end of 2020. Looking ahead, we plan to remain cognizant of the evolving regulatory landscape while also working diligently to improve our unit economics and optimize our product mix.
Mr. James Zheng, Chief Financial Officer of Lufax, commented, We continued to deliver solid financial results in the fourth quarter of 2020, increasing our total income by 5.9% year over year to 13.3 billion. More importantly, during the period, our net profit increased by 17.4% year over year to 2.8 billion, while our net profit margin further expanded to 21.4% from 19.3% in the same period of 2019. Meanwhile, certain factors have affected the pace of our revenue and expense recognition, creating a timing mismatch between our financial and business results. Such factors have impacted our fourth quarter results and will continue to impact our 2021 results going forward. Additionally, these factors will likely result in more quarterly movement and volatility. Whilst our pre-tax net margin is temporarily under pressure due to these factors and price adjustments from September 2020, we have already observed early signs of recovery and expect this trend to continue throughout the remainder of 2021.
Fourth Quarter 2020 Financial Results
TOTAL INCOME
Total income increased by 5.9% to RMB13,286 million (US$2,036 million) in the fourth quarter of 2020 from RMB12,549 million in the same period of 2019. The Companys revenue mix changed with the evolution of its business model as it started to gradually bear more credit risks and increased funding from those consolidated trust plans that offered lower funding costs.
TOTAL EXPENSES
Total expenses increased by 11.7% to RMB9,106 million (US$1,396 million) in the fourth quarter of 2020 from RMB8,153 million in the same period of 2019.
NET PROFIT
Net profit increased by 17.4% to RMB2,847 million (US$436 million) in the fourth quarter of 2020 from RMB2,425 million in the same period of 2019. This increase was partially driven by total income tax expenses in the fourth quarter of 2020, which decreased by 32.4% to RMB1,333 million (US$204 million) from RMB1,971 million in the same period of 2019 due to the decrease in non-tax-deductible items.
EARNINGS PER ADS
Basic and diluted earnings per American Depositary Share (ADS) were both RMB1.25 (US$0.19) in the fourth quarter of 2020. In comparison, basic and diluted earnings per ADS were both RMB1.12 in the same period of 2019. Two ADSs represent one of the Companys ordinary shares.
BALANCE SHEET
The Company had RMB24,159 million (US$3,703 million) in cash at bank as of December 31, 2020, as compared to RMB7,352 million as of December 31, 2019.
Business Outlook
For the first quarter of 2021, the Company expects its new loan sales to be in the range of RMB175 billion to RMB180 billion, client assets to be in the range of RMB385 billion to RMB395 billion, total income to be in the range of RMB14.3 billion to RMB14.6 billion, and net profit to be in the range of RMB4.0 billion to RMB4.2 billion.
For the first half of 2021, the Company expects its new loan sales to be in the range of RMB340 billion to RMB350 billion, client assets to be in the range of RMB375 billion to RMB385 billion, total income to be in the range of RMB28.5 billion to RMB29.3 billion, and net profit to be in the range of RMB7.8 billion to RMB8.0 billion.
These forecasts reflect the Companys current and preliminary views on the market and operational conditions, which are subject to changes.
Changes in Board of Directors and Management
The Company’s board of directors (the “Board”) has approved the following changes to the Boards composition, effective as of January 29, 2021. As a result of these changes, the Board now consists of nine directors, five of whom are independent directors, in compliance with the listing requirements of the NYSE for a majority independent board within one year of the Companys listing. In addition, the audit committee of the Board and the nomination and remuneration committee of the Board now each consist of three independent directors, in compliance with the listing requirements of the NYSE for these committees to solely consist of independent directors.
Mr. Rui Li is currently the Finance Director of Ping An Group, overseeing group-wide finance transformation and accounting operations. He serves on the board of various Ping An subsidiaries and associated companies, including Ping An Trust, Ping An Financial Services, HealthKonnect Medical, OneConnect Financial Technology Co., Ltd. (NYSE:OCFT), and others. Mr. Li has over 25 years of professional experience in financial planning, accounting operations, risk management, and business transformation, and has worked at PricewaterhouseCoopers Hong Kong, Deloitte USA, and Deloitte Canada. Mr. Li is a member of the American Institute of Certified Public Accountants and holds the Chartered Global Management Accountant designation. Mr. Li received his masters degree in business administration from Metropolitan State University, USA, and his PhD in finance from the International School of Management, France.
Mr. Yunwei Tang has served as an independent director for the Universal Scientific Industrial (Shanghai) Co., Ltd., a company listed on the Shanghai Stock Exchange (SSE: 601231), since April 2017, Ping An Healthcare and Technology Company Limited, a company listed on the Hong Kong Stock Exchange (HKG: 01833), since May 2018, and China Jushi Co., Ltd., a company listed on the Shanghai Stock Exchange (SSE: 600176), since May 2019. Mr. Tang served in a number of positions, including lecturer, professor, and assistant to the President and Vice President at the Shanghai University of Finance and Economics from 1984 to 1993, and the President of Shanghai University of Finance and Economics from 1993 to 1999. Mr. Tang obtained his bachelors degrees in economics from Shanghai Institute of Finance and Economics in 1968 and Ph.D. degree in economics from Shanghai University of Finance and Economics in 1987.
Mr. David Xianglin Li is currently a professor and faculty co-director of the Masters of Finance Program at Shanghai Advanced Institute of Finance, an associate director of the Chinese Academy of Financial Research at Shanghai Jiao Tong University (the Academy), and a director of the Academys Risk Management Center and FinTech Research Center. Mr. Li has extensive experience in the finance industry and is a recognized leader in credit derivatives research and risk management. Prior to his current positions, Mr. Li served as the head of enterprise risk methodology and analytics at Prudential Financial from April 2016 to August 2017, the head of modeling at AIG Investments from February 2012 to March 2016, the Chief Risk Officer at China International Capital Corporation Ltd. from May 2008 to January 2012, the head of credit derivative research and analytics at Barclays Capital from June 2004 to April 2008, and the head of credit derivative research and analytics at Citigroup from October 2001 to May 2004. Mr. Li has also served in senior positions at AXA Financial, the RiskMetrics Group/J.P. Morgan, and the Canadian Imperial Bank of Commerce, among others. Mr. Li obtained his bachelors degree in mathematics from Yangzhou University in 1983, masters degree in economics from Nankai University in 1987, MBA degree from Laval University in 1991, and masters degree in actuarial science and Ph.D. degree in statistics from the University of Waterloo in 1993 and 1995.
At the same time, the Board has reviewed and approved the appointment of Mr. Yong Suk Cho and Mr. Gregory Dean Gibb as Co-CEOs of the Company, effective as of January 29, 2021, with Mr. Cho in charge of the Companys retail credit facilitation business and Mr. Gibb in charge of the Companys wealth management business.
Conference Call Information
The Companys management will hold an earnings conference call at 9:00 P.M. U.S. Eastern Time on Tuesday, February 2, 2021 (10:00 A.M. Beijing Time on Wednesday, February 3, 2021) to discuss the financial results. For participants who wish to join the call, please complete online registration using the link provided below in advance of the conference call. Upon registering, each participant will receive a set of participant dial-in numbers, the Direct Event passcode, and a unique access PIN, which can be used to join the conference call.
Registration Link: http://www.directeventreg.com/registration/event/6232817
A replay of the conference call will be accessible through February 10, 2021 (dial-in numbers: +1 (800) 585-8367 or +1 (416) 621-4642; conference ID: 6232817). A live and archived webcast of the conference call will also be available at the Companys investor relations website at https://ir.lufaxholding.com.
About Lufax
Lufax Holding Ltd is a leading technology-empowered personal financial services platform in China. Lufax Holding Ltd primarily utilizes its customer-centric product offerings and offline-to-online channels to provide retail credit facilitation services to small business owners and salaried workers in China as well as tailor-made wealth management solutions to Chinas rapidly growing middle class. The Company has implemented a unique, capital-light, hub-and-spoke business model combining purpose-built technology applications, extensive data, and financial services expertise to effectively facilitate the right products to the right customers.
Exchange Rate Information
This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.5250 to US$1.00, the rate in effect as of December 31, 2020 as certified for customs purposes by the Federal Reserve Bank of New York.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements.
Contacts
Investor Relations
Lufax Holding Ltd
Email: Investor_Relations@lu.com
ICR Inc.
Jack Wang
Tel: +1 (646) 318-0546
Email: lufax.ir@icrinc.com
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